Congress Must Bolster Youth Employment Programs To Secure America’s Economic Future

Every year, tens of thousands of young people across the United States gain valuable experiences in the workforce through subsidized youth employment programs.¹ From on-the-job training and mentorships to resume-building work experience, these programs help young people prepare for a bright future.

Many of these programs are funded by federal, state, and local dollars. But the primary source of federal funding for subsidized youth employment, the Workforce Innovation and Opportunity Act (WIOA), expired in fiscal year 2020.² Since then, WIOA has relied on temporary extensions through annual appropriations.³ Lawmakers should use its reauthorization process to enhance existing structures at the federal level. Improving and fortifying the legislation and its level of investment in subsidized youth employment programs is particularly important for young people ages 16 to 24 who are not currently working or in school. This population is often referred to as “opportunity youth” or “disconnected youth” and is a key group served by WIOA.

In 2022, nearly half of all civilian jobs required prior work experience.⁴ Youth facing barriers to employment such as a low-income background, a disability, or low English proficiency must have access to resources that can help them build the foundational skills and experience needed to obtain a job, sustain themselves, and achieve their future career goals. Ensuring young people have work experience is also critical to achieving federal objectives to build a domestic workforce that meets the needs of employers from in-demand fields and to keep the United States competitive in the global economy.⁵ WIOA’s youth program provides necessary resources, training, and employment opportunities. However, policymakers can and should improve the program by establishing a new stream of dedicated funding for subsidized summer and year-round youth employment programs, such as the one included in a WIOA reauthorization that the U.S. House of Representatives passed in 2022.⁶ Furthermore, adequate funding for complementary youth services is needed to ensure that young people with significant employment barriers can access supportive services and outreach efforts that foster better outcomes in employment programs. These needed enhancements can be implemented either as part of a broader WIOA reauthorization effort or through stand-alone legislation. These efforts will support underserved youth during their critical period of transition into adulthood, providing lasting benefits for their futures, their communities, and the labor force.

Roughly 12.1 percent of youth ages 16 to 24 were not in school or not working in 2021—totaling about 4.7 million young people who could be classified as “opportunity youth” or “disconnected youth.”⁷ Although this number remains below levels seen in the years immediately following the Great Recession, even the lowest rate going back to the mid-2000s—10.7 percent, in 2019—represented more than 4.1 million people. (see Figure 1)⁸ A variety of factors can cause a young person to leave school or a job, including having a child, being involved with the juvenile or criminal legal system, having a disability that makes it more difficult to find or maintain stable employment, and living in a racially segregated community where there are fewer educational and work opportunities.⁹

Disconnected youth are often not out of work or school by choice. Survey data from 2011 showed that more than half of opportunity youth were actively looking for full-time work. Moreover, a nearly equal portion said they “do not have enough work experience to get the kind of job they want” or that they faced other challenges, ranging from family responsibilities and transportation difficulties to not knowing how to interview or to prepare a resume.¹⁰ Disconnection has also been shown to increase during more recent recessions (see Figure 1), suggesting that spikes are driven by reductions in employment as jobs are cut and young people’s work prospects are disproportionally affected.¹¹ Without resources to quickly reconnect to school or work, these young people can face severe long-term effects. Gaps between disconnected and connected youth in income, homeownership rates, self-reported health status, and employment all remain significant or even increase in the years following the transition to full adulthood, particularly for those who were disconnected for more than a year.¹² As a result, one estimate found that every disconnected youth cost taxpayers $13,900 per year in 2011 dollars until age 25, followed by a future lifetime cost of $170,740. This is due to decreased tax collection and increases in public costs associated with the criminal legal, health, and social safety net systems.¹³

Opportunity youth, as a group, also experience a variety of intersecting and compounding systemic barriers in society. Native American, Black, and Latino youth are all consistently more likely to be disconnected from school and work than are their white counterparts.¹⁴ Further, data from 2019 show that 17.4 percent of opportunity youth have a disability, compared with 5.4 percent of youth who are in school or working.¹⁵

Many racial and economic inequities are exacerbated when disadvantaged young people interact with the juvenile or criminal legal system.¹⁶ Nearly two-thirds of youth crime is attributed to disconnected youth, often due to the failure of existing education and workforce systems to provide adequate supports,¹⁷ and these youth experience poverty at much higher rates than the total youth population ages 16 to 24. (see Figure 2) Although poverty rates for both groups have trended downward for nearly a decade, 30.8 percent of opportunity youth still lived in households with incomes below the poverty threshold in 2021, while the same was true for 17.8 percent of total young people in the same age group.¹⁸

The federal government provides few avenues for opportunity youth to further their education or find a job.¹⁹ Many youth-serving resources are tied to institutions such as schools, training programs, or community organizations, and disconnected youth—by virtue of their disconnection—do not have access to those institutions. As a result, the Workforce Innovation and Opportunity Act is particularly important for this group, as its youth services program prioritizes participants with significant barriers to employment.

According to the WIOA “National Performance Summary” from July 2021 to June 2022,²⁰ more than 106,000 of the nearly 125,000 youth served were identified as being low income. (see Figure 3)²¹ Slightly smaller majorities were not attending school or were unemployed, and some faced challenges such as having a disability, being a single parent, struggling with reading or understanding the English language, and being unemployed for more than half a year. Many participants experienced multiple barriers at the same time.

The WIOA youth program is well-positioned to help advance racial equity because of the populations it serves. Young people who identified as Black or African American or Hispanic/Latino comprised a significant portion of people served in program year 2021—nearly 43,800 and 35,400, respectively. (see Figure 4) WIOA services provide a path toward economic security that may be otherwise unavailable to young people of color. With the proper additional investments, the program can become a driving force toward closing persistent racial income and poverty gaps.²²

WIOA lacks dedicated funding for wages, leaving cities and states to fill the gap

Although WIOA requires at least 20 percent of Title I Youth Program funds to be spent on “paid or unpaid” work experiences, wages and stipends to workers are in a bucket of at least nine other eligible uses, meaning there is no dedicated federal funding source to support subsidized youth employment.²³

H.R. 7309, the 2022 WIOA reauthorization bill that the House passed in May 2022, proposed providing dedicated funding to subsidize wages for youth employment programs. The proposal, included in the “Summer and Year-Round Employment for Youth” section of the bill, would have subsidized up to 65 percent of wages earned and guaranteed an income of at least the federal minimum wage through employment programs that received the funding.²⁴ However, the bill saw no further action in the 117th Congress.

Youth employment programs already exist in some states and localities, providing young people, each year, with up to 25 hours of work per week in private sector, nonprofit, or local government positions in their communities.²⁵ According to a 2020 survey, the most common funding source for summer youth employment programs was city general funds, which were used more than twice as often as WIOA grants.²⁶ However, city funds vary each year due to budget volatility and changing priorities. This has drastic consequences for programs and participants, particularly when it comes to long-term planning. For example, increases in funds without sufficient notice can result in scrambles to hire and train more staff, while decreases can lead to cuts in supportive services or even cancellation of that year’s program.²⁷

Subsidized youth employment programs increase incomes, provide essential skills, and decrease interactions with the criminal legal system

Subsidized employment programs support businesses and young workers in the same way that regular employment does: Companies fill talent needs, while workers earn a necessary wage. These programs, for their duration, are particularly effective at increasing earnings and employment for those who are considered harder to employ, including people who have been out of the labor force for long periods of time or do not have a high school diploma.²⁸ Data from cities such as New York, Boston, and Chicago show that participants are more than three times as likely to be employed during the program period than were those who were not offered a slot and thus left to find employment independently.²⁹ These earnings can improve immediate outcomes for disconnected youth, who have higher poverty rates than their peers. Research suggests that existing programs are more likely to serve lower-income young people who identify as Black or Hispanic, groups that typically have a more challenging time finding a job.³⁰ Surveys show that participants often use this money to support their families when they need assistance.³¹ The wages are likely to be spent quickly to alleviate financial hardships, with many dispersed back into the economy to support local businesses.³²

Given that government or private grants typically cover wages,³³ employers also benefit from paying their new workers a fraction of a typical wage during the program while at the same time having the opportunity to expand their potential workforce. Research interviews with potential host sites show that wage subsidies provide a powerful financial incentive for employers to participate in these programs.³⁴ In addition, without wage subsidies, disadvantaged young people would have a harder time competing in the labor market with those who have more work experience or higher educational attainment.

In addition to paying a wage, these work activities are valuable for providing learning experiences and hard skills that program participants can use to develop a work history and resume.³⁵ Many programs also provide access to mentors or an expanded network of peers who can help participants develop needed communication and socioemotional skills—skills that help youth manage their emotions and behavior in and outside workplace settings.³⁶ Mentors can also act as role models by helping participants develop basic employment skills and identifying potential career paths.³⁷ Mentorships and the added income that youth employment programs provide are often linked to reductions in crime rates.³⁸

The previously referenced studies across multiple cities—from Chicago and Philadelphia to Boston and New York—suggest that summer youth employment programs contribute to decreased interaction with the juvenile and criminal legal systems even after temporary employment ends.³⁹ Among the most dramatic results were those seen in Philadelphia, including an estimated 65 percent reduction in total arrests among participants within a year after participating in a summer program; Chicago saw up to a 45 percent reduction in violent crime arrests during the first year after one of its cohort sessions ended.⁴⁰ Moreover, young people in these programs are actively improving their future employment prospects while also lessening their likelihood of criminal legal system involvement; such involvement serves as an immense barrier to employment, particularly for Black and Hispanic women,⁴¹ and youth employment has the additional benefit of reducing the public costs of corrections and legal expenditures.⁴²

Providing adequate funding streams for outreach and supportive services ensures programs serve a larger population and improves retention

Access to subsidized employment programs has been limited, particularly for disconnected youth. In one survey of 21 summer youth employment programs, disconnected youth comprised only 7 percent of all participants.⁴⁷ Two important facts stand out as likely contributors to this trend. The first is lack of capacity: Every program surveyed indicated that it could not meet the local demand for jobs, and programs reported turning away an average of 62 percent of applicants.⁴⁸ The second is lack of targeted outreach and supportive services strategies: Only one-third of programs reported having strategies to target opportunity youth, such as providing year-round services and collaborating with child welfare and juvenile legal systems.⁴⁹ Both the problem and solution are clear, as more than half of program leaders indicated that they would prioritize identifying new funding and serving more youth in the future.⁵⁰ Additional federal funds, such as those accessible through a WIOA reauthorization, can provide a stable source of expansion for these programs, which would make them accessible to more young people while targeting the youth who are hardest to reach and most in need of these opportunities.

The amount of federal money provided in WIOA grants is determined through a formula that ties funds to state or local unemployment and the number of low-income youth.⁵¹ The problem is that not enough grant money is being directed to serve the out-of-school youth population, despite the fact that WIOA reserves 75 percent of its nonadministrative funds for this group.⁵² Without sufficient investment at the federal level, funds allocated through the formula are inadequate to achieve the full potential of the program.

As signed into law in 2014, WIOA included a mandate that more than doubled the percentage of funds spent on out-of-school youth, from 30 percent to 75 percent.⁵³ Staff who oversee local youth programs have stated that the cost per participant from this population is typically higher than for in-school youth because they are harder to track down, requiring more staff resources to generate effective outreach, and they may require additional supportive services such as child care assistance to stay engaged and complete a program.⁵⁴ This has resulted in more young people who are not in school, and therefore more disconnected youth, who participate in WIOA workforce development programs—but this shift in focus has also led to a severe decline in the total number of students being served. Shifting the target population for youth services without providing the proper increases in funding required to maintain the same number of participants caused annual totals for youth served to drop from nearly 195,000 in 2014 to slightly more than 150,000 in 2016, the first year of complete data available after WIOA went into effect.⁵⁵

Out of concern that more students could become disconnected from school and work if they have insufficient access to these funds,⁵⁶ many states have asked for and received waivers allowing them to distribute a larger percentage of funds to in-school youth.⁵⁷ However, states would not have to rely on these waivers if more funding were available to accommodate the increased costs and staffing capacity necessary to properly serve out-of-school youth in subsidized employment programs, in addition to meeting the needs of students attending school.

Many programs lack sufficient funds to provide critical supportive services to out-of-school youth participating in employment programs. Although nearly all respondents to a survey of 168 workforce development program administrators wanted to provide more supportive services—and only one-fifth indicated that their clients’ needs were being met—just 36 percent said they were likely to do so in the near future, with lack of funding being the most common reason for their inability to provide more services.⁵⁸ Moreover, 97 percent said that these supports were important for ensuring that participants complete their programs, since the most commonly identified reasons why people dropped out were barriers, such as financial difficulties and insufficient child care,⁵⁹ that the supportive services could help alleviate. Importantly, one factor associated with the ability to provide more of these services was having a larger budget.⁶⁰

The energy around addressing youth employment needs has been growing, thanks to the U.S. Department of Labor’s recent introduction of its Youth Employment Works strategy that includes several recommendations also shared in this report.⁶¹ But the Biden administration cannot make the necessary changes alone. Congress should take steps to make certain that young people who have been disconnected from education and employment are not left behind. Ensuring young people have employment and reengagement opportunities can be achieved as part of a reauthorization of the Workforce Innovation and Opportunity Act—as with the 2022 House-passed bill—or by way of stand-alone legislation such as the Connecting Youth to Jobs Act, introduced most recently by Rep. Jesús “Chuy” García (D-IL) in the 117th Congress.⁶²

For opportunity youth to find stable employment on the path toward a career, they will often need assistance to break through the barriers that have kept them out of the labor market. Federal legislators can play a critical role in this journey by adopting the recommendations discussed in the subsections below.

Create a dedicated federal funding stream to subsidize wages of summer and year-round employment programs

Establishing consistent federal funding for wages would free up resources for state and local policymakers to expand subsidized youth employment programs to those who have significant employment barriers, as well as establish programs where they do not currently exist. Programs that receive federal funding should be required to ensure that participants will be paid at least the highest minimum wage available at the federal, state, or local level. This will allow more disadvantaged youth to benefit from the income and valuable work experience these programs provide while steering them away from futures that include interactions with the juvenile or criminal legal system.

Dedicate additional funds specifically to supportive services and outreach efforts in order to connect more young people with the resources they need

Dedicated dollars are necessary to engage disconnected young people and help them gain enough stability to participate in a subsidized youth employment program, as well as stay in and complete that program. Allowable supportive services should include the following costs: training, supplies, work-related uniforms, food and nutrition, housing, transportation, child and dependent care, educational testing, mental health and substance abuse services, domestic violence services, legal aid services, legal fines and fees, accommodations for people with disabilities, and cash assistance.

America’s future is in the hands of its young people, and leaving millions of them behind today will make it much harder to create a more inclusive economy tomorrow. The growing recognition of the need to support opportunity youth, and other disadvantaged youth, through the Workforce Innovation and Opportunity Act is appreciated and necessary, but it must be backed by the resources required to tackle the problem most effectively. Implementing dedicated funding streams for wages and youth services in WIOA would not only enhance the quality of experiences provided by WIOA-funded employment programs but would also make them more accessible to those youth most in need of gaining work experience. Young people and the nation’s economic future would be better off for it.

The author would like to thank Kathy Tran from the Center for Law and Social Policy and, from the Center for American Progress, Marina Zhavoronkova, Lily Roberts, Rachael Eisenberg, Madeline Shepherd, Edwith Theogene, Emily Gee, Jean Ross, Jared Bass, and Tania Otero Martinez for their helpful review and contributions, as well as Jessica Vela and David Correa for their assistance in fact-checking.